UK: Travelodge wins backing for CVA rescue deal
BUDGET hotel chain Travelodge was thrown a lifeline today as landlords and creditors backed a controversial rescue deal.
Creditors, including landlords across the UK, voted in favour of a plan that will see rent payments slashed across more than 100 hotels and 49 hotels off-loaded to other operators.
The company voluntary arrangement (CVA) is designed to allow Travelodge to exit poorer performing leases while also free itself of a crippling debt burden.
A significant number of the properties are owned by millionaire Nick Leslau’s investment vehicle Prestbury, which is understood to have supported the move.
Travelodge is seeking to transfer 49 hotels to other operators within the next six months, during which time rents on the properties will be reduced by 45%, and it wants to cut the rents on 109 of the hotels it plans to retain by 25% for the next three years.
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Among the hotels Travelodge is seeking to transfer are those at Beacon Hill, at the junction of the A14 and A140 near Needham Market, and at Clacton-on-Sea, while the hotels which it aims to retain at reduced rents include those at on the A11 at Barton Mills, near Mildenhall, and on the A120 at Great Dunmow.
A total of 347 other hotels, plus four restaurants and two offices, will be retained by Travelodge at current rents and payment terms throughout the CVA period.
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These include the new Travelodge which opened in the centre of Ipswich earlier this month and those at Capel St Mary, Stowmarket, Lowestoft, Feering, near Colchester, and Chelmsford.
Accountants KPMG, which will supervise the CVA, said at that time the plan was unveiled last month that landlords of the affected hotels could see a return of up to 23.4p in the �1 under the arrangement, againstjust 0.2p in the �1 under the alternative of Travelodge going into administration.
KPMG said the CVA proposal was one facet of a wider restructuring plan to tackle leases which were proving unsustainable, the majority of which had been agreed during the pre-2008 property peaks.
“With the support of its lenders, shareholders and landlords, the company will be able to reshape its debt and operational structure to a model more suited to these straitened times,” the firm added.